This invention relates to a method and system pertinent to yield managed service contract pricing.
Organizations who provide services to customers periodically negotiate contracts for these services. Services include but are not limited to repair and maintenance, transportation of goods, transmission of data, warehousing, professional services such as medical care or consulting, and equipment or facilities use, such as hotels or rental cars. Services are distinguished from goods and materials in that services can not be built in advance and stored for future use.
Service contracts typically specify the type and level of service to be provided and the price to be paid for services to be delivered over the course of a contract horizon, usually a year or more. Many services are time sensitive, in that the service must be provided at a specific time or in a specific time interval. Many services are also location sensitive, in that service must be provided at a specific location. Note that the contract horizon (e.g., a year) spans a number of service delivery intervals (e.g., days) in which the contracted services are actually required.
We note that current contract pricing practice is to evaluate each new customer opportunity in isolation, and to consider the total or average service requirements of the customer, without detailed analysis of how these requirements are likely to be distributed across service intervals. We have ascertained that this practice fails to allow consideration of the fit of the customer with other related service activity that may be using the same resources, and fails to consider the peak resource levels needed to meet service requirements. The resource evaluation and resulting costs are therefore at best approximate, and may significantly under estimate (in the case of coinciding peak demands) or over estimate (in the case of complementary demand patterns) actual service costs.
These conditions indicate a need for novel methods for considering an accurate representation of a specific customer""s detailed requirements, in the context of existing xe2x80x9cbaselinexe2x80x9d activity.
A primary advantage of such a yield managed contract pricing system is that by looking at the combined detailed requirements, one can manage the overall net profitability (also known as margin or xe2x80x9cyieldxe2x80x9d) of the service organization""s resources, in the critical customer pricing decision.
To this end, we have now discovered an invention subsuming novel methodology and system pertinent to yield managed service contract pricing.
In a first aspect, the invention includes a computer system comprising:
1) means for inputting first information comprising a baseline profiling services contracted to zero or more existing customers;
2) means for inputting second information comprising a profile of the services to be contracted to one or more new customers; and
3) means for analyzing second information in the context of first information for the purpose of determining a range of prices to be considered for the services to be contracted.
In a second aspect, the invention includes a computer implemented method comprising the steps of:
1) inputting first information comprising a baseline profiling services contracted to zero or more existing customers;
2) inputting second information comprising a profile of the services to be contracted to one or more new customers; and
3) analyzing second information in the context of first information for the purpose of determining a range of prices to be considered for the services to be contracted.
In a third aspect, the invention comprises a program storage device readable by a machine, tangibly embodying a program of instructions executable by the machine to perform method steps for yield managed service contract pricing, said method steps including:
1) inputting first information comprising a baseline profiling services contracted to zero or more existing customers;
2) inputting second information comprising a profile of the services to be contracted to one or more new customers; and
3) analyzing second information in the context of first information for the purpose of determining a range of prices to be considered for the services to be contracted.